Forum2009 › OECD Forum 2009: Background reading on Forum themes
|▪ Economic recovery and long-term growth||▪ Corporate governance||▪ Education|
|▪ The jobs crisis||▪ Tax evasion and abuse||▪ Health economics|
|▪ Protectionism versus open markets||▪ Fighting corruption||▪ Gender and development|
|▪ Sustainable pension systems||▪ Green growth and water||▪ Financing development|
|▪ Innovation and technology||▪ Energy solutions||▪ Food security|
We are still in the grip of the worst economic crisis of modern times. Restoring stability, confidence and sustainable growth is the priority. The OECD is working with governments and international organisations to help end the crisis and lay the foundations of a stronger, cleaner and fairer global economy.
OECD Week is your opportunity to add momentum to this effort. The highpoint in the Organisation’s annual calendar, OECD Week brings together member and partner governments from around the world, as well as leading representatives of business, labour, NGOs, academia and the media, to thrash out ideas and find solutions to pressing global problems. Two major events make up OECD Week: a two-day public Forum with debates on topical issues between high-level panels of experts and diverse, motivated, audiences; and the Ministerial Council Meeting, which sets mandates for the OECD in light of world events and current government needs. Discussions at the Forum will feed directly into the ministerial meeting. Korean Prime Minister Han Seung-soo will chair the ministerial gathering and deliver a keynote address at the Forum.
This year marks the 10th OECD Forum. Never before has the public’s role in supporting government policy discussions been so critical. Following on from the G20 summit and meetings of the G8 and IMF/World Bank Group, and nourished by discussions at other forums such as Davos and Port Alegro, OECD Week will help to put in place the ideas and tools that the world’s governments need to end the worst economic crisis in our lifetimes.
The 2009 OECD Forum programme reflects the objectives of the OECD for sustainable growth in a world economy that is not only stronger but also cleaner and fairer.
To make the world economy stronger, we must revitalise it by improving regulation, strengthening private and public sector governance, promoting well-regulated, effective markets for trade and investment , and enhancing robust “green” growth.
To make the world economy cleaner, we need to promote transparency and integrity, fight corruption and money-laundering, combat tax evasion, address corporate governance failures and restore public trust in public and private institutions. We must confront climate change and clean up the environment.
To make the world economy fairer, we must boost employment and social inclusion, spread opportunity, improve equity, provide decent education and healthcare, and build development goals more firmly into the core of our global policy thinking and strategies.
OECD stands for economic co-operation and development, and OECD Week demonstrates the Organisation’s role as a hub for dialogue on global economic challenges. In the words of OECD Secretary-General Angel Gurría, "we can only find solutions through an enhanced dialogue and co-operation among all stakeholders.”
Hot issues on the Forum agenda include:
The economic downturn is the steepest and longest in living memory. How to restore growth is the immediate challenge, but there are serious long-term issues to resolve as well. How can boom-bust cycles be avoided? How can we assure a green recovery and move towards a low-carbon economy to help fight climate change? And how can we make sure a similar crisis does not occur again? Managing the crisis is creating huge strains on fiscal deficits and debt. Can governments stay the course? How can they unwind emergency positions when the crisis passes? There are questions of principle, too. The market and regulatory failures that led to the crisis have challenged laisser-faire orthodoxy. However, government-driven economies have also failed in the recent past to deliver economic or social goals. Are new rules of the game needed for governments and markets? What lessons can be learned from the OECD’s growth models and the experiences of emerging markets? Should central banks play a greater role in monitoring asset-price bubbles?
This crisis is increasingly social in nature. OECD-wide unemployment is rising sharply and millions of people will be out of work in the years ahead. No sector will be spared, from construction and industry to finance and tourism. Young people, older workers, those on temporary contracts, and immigrants will be particularly affected. How can labour market policies, including income-support and job-training schemes, help to support the unemployed? What can be done to help the most disadvantaged weather the crisis? Is there a case for exceptional government support to protect normally safe jobs for the duration of the crisis, and what are the downsides? Which labour market measures stand to achieve the best results? With fiscal revenues falling due to lower activity and rising unemployment, how will public budgets and employment services cope?
Global trade is shrinking. International trade-policy measures to keep markets open will be vital. Protectionism may seem like a short-term solution, but it damages firms and households by depriving economies of vital capital and resources, causing trade tensions, and pushing up costs for everyone. Trade and international investment did not cause the current crisis and cannot by themselves bring about a recovery, but they are a crucial component of sustainable long-term development. The global economy, development and the environment all depend on well-regulated, open trade between nations. At OECD Week, participants will debate these issues and address current protectionist pressures. Goods and services exports now make up a full third of developing countries’ average national incomes, and developing countries account for as much as one third of world trade. Boosting development is vital, not just to meet the Millennium Development Goals, but for the health of the entire global economy.
Pension schemes have been a major victim of the crisis. Public pension funds are suffering, while private pension schemes have seen sharp declines in capital values. Two-thirds of losses are estimated to be in the United States alone, while other countries from the UK to Japan, and including the likes of Iceland and Ireland, have also been hard hit. What can be done to help people close to retirement or who have just retired? How can pensions systems be reformed to make them less vulnerable to financial market fluctuations?
Can faith in financial markets be restored? Failures and weaknesses in corporate governance were a primary cause of the financial crisis. Risk management and rating systems failed, while accounting and reporting standards often proved insufficient. Remuneration incentives were out of line with shareholder and wider public interests, with some policies actually encouraging excessive risk-taking. Taxation and tax evasion may also have had some influence. What is being done to fix these failures and what more is needed? What improvements can the OECD bring to its own Principles of Corporate Governance and Guidelines for Multinational Enterprises, so as to encourage better, more responsible practices in boardrooms?
The public cost of bailing out failed banks and firms has cast a spotlight on the need to curtail tax evasion and the abuse by firms and individuals of non-transparent, low-tax jurisdictions. The OECD has led the fight against tax evasion for several years and is now supporting G20 efforts to tackle offshore tax abuse. Tax evasion weakens the ability of governments to finance services, from education and healthcare to infrastructure. The end result is higher taxes for honest taxpayers. Tax evasion and misuse of public funds trap millions of people in poverty. How can tax evasion be stopped and abuses flushed out? How can incentives for tax evasion be reduced? At the same time, how can governments face the twin challenge of making taxation more equitable in the crisis, while reducing its burden on economic activity? OECD Week promises a rich and relevant discussion in one of the world’s leading forums on tax policy.
Corruption threatens good governance, sustainable development, democratic process and fair business practices. Thanks to international conventions, corruption and bribery are now universally condemned. The OECD’s 1997 Anti-Bribery Convention was the first global instrument to fight corruption in cross-border business deals. Ratified by all 30 OECD members and eight partner countries, it makes bribing a foreign public official a punishable offence in signatory countries. The FATF works to ensure that it is harder to launder illicit funds for criminals and for terrorist finances. But more needs to be done. South Africa is the only African country to have signed the OECD Convention: how can more countries, particularly in emerging markets, be encouraged to join the fight? How do anti-corruption initiatives affect international agreements in areas such as investment and procurement? Can the public be better mobilised to stamp out corruption, whether in politics or in business?
Huge fiscal packages have been launched to deal with the crisis, but how can they achieve the best returns in terms of a robust, long-term recovery? One way is to harness innovation in the service of growth, and policies along these lines are being implemented or considered in many OECD countries as part of stimulus packages. Today’s world economy is knowledge-based and interconnected. Fiscal spending programmes on hard, physical infrastructure, such as roads and energy, will be important, but spending on “soft” infrastructure, such as skills, creativity and innovation, is just as vital. Innovation and new technologies are essential to many developing countries, too. What actions are needed to foster innovation and investment in both broadband networks and human capital? What wider social, environmental and development spin-offs are possible? Can economic policy tools be used to promote “green” technologies, particularly in energy? Is nuclear energy part of the solution? Innovative and original arguments are expected at this key session at OECD Week.
“Green growth” will help reduce greenhouse gas emission and environmental pollution and create new growth engines and jobs with green technology and clean energy, bringing together information and communications technology, biotechnology, nanotechnology and transcending them all. Making best use of our water resources is a major element of a green growth strategy. Water is the basis of life and everything from food to heavy industry is dependent on water to some degree. But the credit crunch is squeezing water utilities and municipalities dry, public finance for infrastructure maintenance and upgrades is evaporating, the financial viability of utilities is threatened, and vital maintenance and rehabilitation work is being postponed. How can governments best emphasise the urgency of investing in water supply and sanitation services in a time of crisis? What can be done to make investing in water infrastructure both more attractive and smarter?
The economic crisis provides an opportunity for firms to improve energy efficiency and for the energy sector to re-evaluate its costs. In many cases, stimulus packages include long-term investment in infrastructure. These measures should be designed so that they do not lock in traditional, polluting energy production and consumption, but instead promote investment in cleaner, climate-friendly alternatives. Is it time to remove expensive and environmentally harmful subsidies to fossil fuel-based energy? Should agriculture subsidies be reformed or removed entirely? What role should nuclear energy play in our post-crisis future?
In times of economic crisis, spending on education suffers in both rich and poor countries. Public budgets shrink and high tuition fees become harder for individuals to afford. Everything from physical infrastructure to teacher pay and student performance is hit. Some governments have set out to tackle this by investing in school infrastructure and future skills. Financial markets had started to play a larger role in funding education, notably through fees. Can these policies be sustained? Should they be modified? How can governments ensure that education systems contribute to realising their countries’ economic and social goals?
Historically, spending on healthcare rises faster during recessions than in boom times—and then remains at that higher level. According to some projections, spending rates for long-term care of the elderly could quadruple by 2050. Improving the efficiency of healthcare systems is not a luxury: it is an urgent necessity, particularly at a time when the economic crisis is cutting deeply into public budgets even as the population across OECD countries ages. How will countries balance the growing need for long-term healthcare with the growing costs of such care? What hard choices will have to be made? How can governments ensure that all their citizens have equal access to affordable healthcare? How to cope with a global pandemic? And how can new technologies help deliver?
While reports show that women generally excel at school, men frequently earn more and are more likely to hold positions of power in political and economic life. This gap, evident in nearly every OECD country, is even more pronounced in developing countries, where discrimination against young girls and women and customs throws up barriers to education and formal work. This in turn affects the development potential of whole communities and countries. While women in low-income countries often play an important role in their families, their role in public life—including economic life--is usually severely circumscribed. What is the impact of women’s absence from economic and political life on the development of a country? How can societies eliminate entrenched discrimination against women? What role should men play in gender and development programmes?
In 2008, total net official development assistance from members of the OECD’s Development Assistance Committee rose by 10.2% in real terms to USD 119.8 billion. This is the highest dollar figure ever recorded. However, the financial crisis is having a serious impact on low-income countries. World trade is experiencing its largest decline since 1929 and commodity prices, particularly for the exports of low-income countries, are falling. Foreign direct investment and other private flows are on the decline, and remittances are expected to drop significantly in 2009. The budgets of many developing countries were hit hard by the rises in food and oil prices in the last two years. While the full effects and duration of the financial crisis are still to be seen, it is important for development aid to help compensate for the sharp reversal in overall flows to developing countries—and to keep the Millennium Development Goals on track. How can richer nations facing a crisis at home be urged to keep up with their development aid commitments? What is the developed world’s responsibility to low-income countries? How important is development aid to the world economy?
The number of malnourished people around the world is estimated to rise to nearly a billion this year as the economic crisis takes its toll on developing countries. Increasing food production alone does not guarantee that hunger will be alleviated. In many cases, hunger is a problem of poverty or of accessibility to available food. There is ample evidence that efforts to stabilise prices have failed or have come at the expense of massive distortion of markets. How can food stocks be secured when the global population is expected to increase 50% by 2050, when there is only a finite amount of cultivable land, and when climate change is uprooting all of our assumptions about agricultural production? Can a normal price mechanism encourage markets and resources to balance supply and demand? To what extent has speculative behaviour caused sharp price volatility and what might be done about it? How can freer trade help? What role can new technology play in alleviating food shortages and improving security?